Electricity Regulation in the US: A Guide (Second Edition)

This updated handbook is designed to provide an overview of the electric power industry and how it is regulated in the public interest. The handbook provides a broad perspective on the universe of utility regulation, including industry structure, regulation, ratemaking, transmission, planning, energy efficiency, emissions, low-income programs, and more.

This conclusion is hardly surprising when one considers the intricate web of wires that connects every light switch and plug in the United States to massive power plants, individual rooftop solar panels, and every source of electricity generation in between. Add to this the layer of pipes that runs underground to feed stovetops, power stations, and factories with natural gas, and you have the foundation on which modern society has been built.

Over the past 150 years, electricity and natural gas companies have developed what we now recognize as monopolies, offering electricity and natural gas service from a single provider on largely unnegotiable terms. To address the disparity in economic leverage between the customer and the monopoly provider, regulation of the utility system has evolved to ensure that the system is reliable, safe, and fairly priced.

With increasing customer demand for clean, local energy, coupled with dramatically falling prices for renewable technologies, and increasingly smart infrastructure needed to modernize the power system, the regulatory framework continues to evolve to keep pace.

The updated RAP handbook, Electricity Regulation in the United States: A Guide (Second Edition), is designed to provide an overview of the electric power industry and how it is regulated in the public interest. Newly appointed regulatory commissioners, newly hired regulatory staffers, and first-time rate case participants will find the guide a useful point of reference. Others with more experience will find new insights into the evolution of the regulatory framework and a handy reference for elements of the process with which they have limited familiarity.

This publication updates and expands on the original guide published in 2011, and provides a broad perspective on the universe of utility regulation, including industry structure, regulation, ratemaking, transmission, planning, energy efficiency, emissions, low-income programs, and more.

New chapters in this updated version address integrated distribution system planning and renewable energy, as well as a greatly expanded look at the regulatory treatment of environmental compliance costs. An expanded section on the fundamentals of rate regulation weighs issues that have been raised by technological developments, including the “smart” grid and the rise of distributed renewable generation.

Each chapter is succinct, but contains references to relevant documents that have more detail. The guide also includes a lengthy glossary of utility-sector terms, as well as lists of references to related RAP publications and other useful resources.

Electricity Regulation in the United States: A Guide (Second Edition) is a living document that we intend to update in the future, and we welcome corrections, additions, or ideas for a better way to present issues. Please send feedback to [email protected].